Ethereum Open Interest reaches a new historical maximum: Will the ETH price follow?

The price of Ether (eth) fell 6% between March 19 and 21 after not being able to break the resistance level of $ 2,050. More markedly, eth has fallen by 28% since February 21, with a lower performance to the broader cryptography market, which decreased by 14% during the same period.

Despite eth prices struggles, Ether Futures's open interest reached a record record on March 21. This has led merchants to question whether the big investors are positioning for a possible concentration towards $ 2,400, while raising concerns about the risks of waterfall liquidations due to the greatest leverage.

The open interest added in Ether's futures increased by 15% for two weeks, reaching a record of 10.23 million eth on March 21. Binance, Gate.io and Bitget collectively dominate 51% of the market, while the Chicago Mercantile Exchange (CME) has 9% eth Open Interest, according to Coinjed data. This contrasts with bitcoin's futures, where CME leads with a 24%market share.

The demand for eth leaway has decreased

The increase in activity in eth futures contracts generally indicates the interest of institutional investors, since open interest measures the demand for leverage. However, buyers (Longs) and vendors (shorts) always coincide, so an increase in open interest does not inherently indicate a positive perspective.

To assess whether buyers seek more leverage, analysts must compare monthly prices of future eth contracts with detecting change rates. In neutral markets, these derivatives generally operate from 5% to 10% higher annualized to take into account the extended liquidation period. If the merchants become bassists, this cousin would probably fall below that range.

The annualized premium for the futures of eth monthly fell to less than 4% on March 21, below 5% two weeks before. This decrease in futures premium suggests reduced incentives for merchants to use the “effective and transport” strategy, which implies selling futures contracts while buying spot eth simultaneously to capture the premium as a fixed income trade.

ETF Spot outputs and a reduction in Network Rate Pressure eth Price

Part of Ether's decline comes from the weak demand for funds quoted in Ether exchange (ETF) based in the US. The macroeconomic environment has also damping investors' confidence, as economists warn of increasing recession According to the Boston Globe, the risks due to global tariff wars, inflationary pressures and the US government expenses.

However, some analysts argue that the recent weakness of Ether's prices comes from an imbalance between network rates, required to compensate for validators, and the interests of decentralized applications (DAPPS) and layer scale solutions of layer 2. This criticism was perfectly summarized by Martin Köppelmann, co -founder of Gnosis.

In a sense, ethereum's successful change to the Swallow test and the introduction of Blob's space to improve scalability through the Rollups, while significantly the network capacities increase significantly, factors are also considered factors that limit Ether's prices growth. Despite the low transaction costs of their layer 2 solutions, some eth investors believe they are not being properly rewarded.

The price of Ether has faced pressure by increasing macroeconomic risks, while DAPPS demand continues to decrease, either due to the increase in competition or interest of diminishing investors. ethereum's 7 -day base layer fell to $ 605,000 on March 17, a strong drop of $ 2.5 million only two weeks before.

There are no indications that the increase in open interest in future eth is promoted by the upward positioning. On the contrary, the demand for leverage long positions remains remarkably weak, which suggests a cautious feeling of the market.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The points of view, the thoughts and opinions expressed here are alone of the author and do not necessarily reflect or represent the opinions and opinions of Cointelegraph.